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S&P 500, Dow futures rise on rate-pause hopes; chip equipment, auto stocks drag

2023-09-15T11:32:46Z

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 29, 2023. REUTERS/Brendan McDermid

The S&P 500 and Dow futures rose on Friday as investors remained optimistic about a likely pause in U.S. interest-rate hikes, while chip-equipment firms and automakers dropped in premarket trading.

Applied Materials (AMAT.O), Lam Research (LRCX.O) and KLA Corp (KLAC.O) fell nearly 2% each after Reuters reported Taiwan’s TSMC (2330.TW), the world’s top chipmaker, had asked vendors to delay delivery of high-end chipmaking equipment, weighing down Nasdaq futures.

Automakers Ford Motor (F.N) and General Motors (GM.N) shed 1.2% and 1.9%, respectively, after the United Auto Workers union launched simultaneous strikes at three factories owned by the “Detroit Three”, including Chrysler-owner Stellantis (STLAM.MI), marking the most ambitious U.S. industrial labor action in decades.

SoftBank’s Arm Holdings gained 6.5% after a stellar Nasdaq debut on Thursday, rekindling hopes of a turnaround in the initial public offering (IPO) market.

“Move aside Nvidia, there’s a new player in town and its name is Arm,” said Russ Mould, investment director at AJ Bell.

“When a stock goes up 25% in a day, there will naturally be FOMO among investors – fear of missing out. That might explain why its shares look like they will jump again today.”

Arm’s strong debut prompted grocery delivery app Instacart to raise the proposed price range for its IPO to target a fully diluted valuation of up to $10 billion.

Investors are also focused on Neumora Therapeutics’ (NMRA.O) debut later in the day after the SoftBank-backed firm raised $250 mln in its U.S. IPO.

Wall Street’s main indexes gained on Thursday after hotter-than-expected economic data eased worries about a recession without raising fears of a U.S. interest rate hike next week.

Traders’ bets on the Federal Reserve holding rates steady in its Sept. 20 policy meeting remained intact at 97%, while their odds for a pause in November stood at nearly 65%, according to the CME FedWatch Tool.

Investors will monitor August industrial production and the University of Michigan’s preliminary reading of consumer sentiment due later in the day.

Upbeat data on China’s factory output and retail sales in August bolstered market sentiment, as it suggested that a flurry of recent measures to shore up the world’s second-largest economy were starting to bear fruit.

U.S.-listed shares of Alibaba Group Holdings , JD.com , PDD Holdings (PDD.O) and Xpeng rose between 0.1% and 1.6%.

At 7:10 a.m. ET, Dow e-minis were up 85 points, or 0.24%, S&P 500 e-minis were up 6 points, or 0.13%, and Nasdaq 100 e-minis were down 4.5 points, or 0.03%.

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